If you’ve ever been asked how likely you are to recommend a company to a friend or colleague, you’ve filled out a Net Promoter® Score (NPS) survey, even if you’re not sure what it is or whether you can use it at your firm.
NPS is a tool designed to measure customer satisfaction, the data from which can be used as both a differentiator in a competitive marketplace and a guide to improve client service. While survey experts report that client satisfaction with CPA firms has increased in recent years, the accounting profession still lags far behind the global standard for service excellence; in fact, it’s barely considered average.
“It’s not so much that people are saying we’re getting terrible service, what they’re saying is we’re not getting great service,” says ClearlyRated CEO Eric Gregg. The biggest mistake firms make is failing to be consistently proactive with clients, he notes. Accountants are great at answering questions, but sometimes they’re not so great at asking them.
ClearlyRated, which offers a survey platform to collect NPS data, recently surveyed 182 CPA firm buyers and users of accounting firm services, large clients or small, and in a variety of roles. The average NPS score of 39% is one point higher than ClearlyRated’s 2021 NPS benchmarking study, but 50% is classified as excellent and 70% as world-class by global NPS standards. The accounting profession is closer to Fios by Verizon (32%) or Kaiser Permanente (40%) than it is to Vanguard (70%) or Costco (79%).
NPS Basics
What is NPS? And why are firm leaders using it (or not)? IPA talked with several experts to find out.
NPS centers on one question: “On a scale of 0 to 10, how likely are you to recommend our business to a friend or colleague?” Ten is extremely likely and zero is not likely at all. To calculate NPS, subtract the percentage of “detractors” – those who respond with a six or lower – from the percentage of “promoters,” who respond with a nine or 10. “Passives” are in between.
The concept was created by Fred Reichheld at Bain & Company and was later introduced as the Net Promoter® Score methodology in 2003 when Reichheld published a Harvard Business Review piece, calling it “the best predictor of top-line growth.”
Two firm leaders who spoke to IPA are “promoters” of the tool. Deanna Salo, MP of Oakbrook Terrace, Ill.- based Cray Kaiser, and Steve Ritchie, MP of Eugene, Ore.-based Kernutt Stokes, are using NPS to set their firms apart in the marketplace, improve service and retain clients.
Cray Kaiser seeks client feedback annually and Kernutt Stokes sends surveys every other year. Both survey their top clients, and both seek additional information beyond the ‘would you recommend’ question, as is common for the vast majority of NPS users. Ten or fewer questions produces the best return rate, and questions that highly correlate with overall satisfaction include perception of value, accessibility and responsiveness, how quickly the firm resolves issues and whether the firm is delivering proactive solutions.
‘Shock’ at Low NPS Scores
Individual firms that track NPS typically see scores that far exceed the 39% figure found in ClearlyRated’s survey. In fact, Salo and Ritchie were shocked by that number, considering they’ve received NPS scores well into the “world-class” range since they started surveying about five years ago. Likewise, The Growth Partnership says that of about 20 CPA clients a year that track NPS, the average score has been 79% since 2014 – a number that jumped to 84% in 2021.
ClerlyRated’s roughly 100 CPA firm clients also have average NPS scores of more than 70%, but Gregg says the high numbers are not representative of the industry overall, which is significantly lower. The firms utilizing ClearlyRated tend to be more mature in their client experience measurement and strategy, often focusing both time and resources toward ensuring a consistently remarkable service experience.
Gregg believes the best benchmark for firms is internal – the change from year to year or quarter to quarter. The next is aspirational – aiming for world-class rankings, for example. He puts industry benchmarks last. The value of NPS comes not from the data itself but from firms acting on the information by leveraging the positives and fixing the negatives.
The tool can be used for improvement, no matter the score. Salo recalls approaching a loyal client and asking, “ ‘Are we really a 10, or are you just being too kind? I have broad shoulders, if you want to give it to me, give it to me.’ ”
Here are some of the benefits of NPS at Kernutt Stokes, where multiple professionals of the client company are surveyed – controller, CFO and owner, for example. The lowest score the firm ever received was 78%.
- It proves that fixing problems can turn passives into promoters – One of Ritchie’s own clients responded as either a passive or detractor. Ritchie reached out and asked what happened and how the firm could prevent the problem in the future. “To this day, this client is a promoter of ours, but you know, had we not asked the question, we probably would not have the client today.”
- It uncovers problems leaders didn’t know they had – Scores on whether the firm was proactive showed Ritchie that clients wanted more information and interaction to keep them on top of developments in their industry. The firm started a monthly newsletter, specifically customized for clients, and a year after launch, those scores improved significantly. “Oh look,” Ritchie jokes, “when you listen to your clients and you actually do what they ask you to do, they’re happier!”
- It adds critical data to the due diligence process in a potential acquisition – Conducting an NPS survey with clients of the prospect firm can produce a goldmine of information. “I would not do another acquisition without one.”
At Cray Kaiser, where the lowest score was 86%, NPS provides a number of benefits as well:
- It’s useful for firm promotion and differentiation – Cray Kaiser’s survey of the firm’s top 200 clients offers an opportunity to give a testimonial. Every year, the firm gets one or two client shout-outs that are promoted on the website and elsewhere.
- It shows clients that the firm cares – Some partners are afraid they’re pestering clients with a survey ever year, but Salo says the bigger risk lies in not asking. (“Once a year is not a huge ask.”) NPS can spark some interesting conversations about the relationship, “and that, to me, is what keeps clients for 50 years and it’s our 50th anniversary this year.”
- It aids in staff retention – The survey is conducted in June, just after the firm completes the bulk of audit and tax work for many clients, so their interaction with the firm is fresh. Detailed NPS results are presented at a firmwide meeting every August, and staff look forward to it and appreciate the feedback that comes directly from clients, Salo says.
- It keeps partners accountable – Partners receive NPS responses from their clients directly and forward them to the team. “They know information is powerful, and everybody can be vulnerable to hear that they can do better.” Partners can be reluctant to approach clients reporting low scores. “Some don’t want to, but I say, ‘Damn straight you’re calling the client.’ ”
Neither Salo nor Ritchie believe collecting NPS data is difficult, expensive or time-consuming. NPS is designed to be straightforward. “It serves as a good benchmark for year-over-year progress, for one,” says Ingenuity Marketing Group owner Dawn Wagenaar, who encourages her CPA firm clients to use NPS in their satisfaction surveys. “It also helps to quickly clarify where they need to improve. Comparing an eight to a six versus sifting through a bunch of words and trying to glean whether they’re on track or not – that score really gets right to the point and tells us where they need to improve.”
Accounting Usage of NPS is Low
Harvard Business Review reports that at least two-thirds of the Fortune 1000 use NPS, yet just more than a quarter (27%) of accounting firms do, according to IPA’s 2022 Firm Administration Survey of 235 participating firms. Cray Kaiser and Kernutt Stokes were under $20 million in net revenue and represent the tiny minority of firms (18%) that size tracking NPS; 39% of firms above $20 million use NPS, according to IPA data.
It’s unclear why NPS isn’t used more widely within public accounting. One possibility is that some firms can only innovate as quickly as the most conservative partner. Even so, usage is ticking up. IPA data on NPS, collected since 2020, shows the percentage of participating firms moving from 21% initially to 25% in 2021 to 27% this year.
Some of the typical NPS roadblocks are messy databases or low response rates, although neither problem arose at Cray Kaiser or Kernutt Stokes. The stickiest issues, as is usually the case, are the emotional ones.
In the early days of surveying, Salo says the partners chose which clients within the top 200 would receive the invitation for feedback, but she put a stop to that practice. “I basically said, ‘I’m sorry. Anybody who’s in our top 200 clients is getting the survey.’ You’ve got to get guts. Let’s be transparent, we’re trying to get information to do better.” Now, one survey per client is sent.
Ritchie says it wasn’t an easy decision to launch NPS. One much-discussed fear was whether client relationships would suffer if the firm focused on the negative and reminded them of a disappointing interaction. “None of that turned out to be true,” Ritchie says. “It’s been a tool of improvement for us.”
Nevertheless, a big unspoken issue lurked in the background – “Am I going to look bad in front of my partner group?” To create a safe environment, scores were not used to measure partner performance or determine compensation, and individual partner data was not shared firmwide. Only a couple of leaders knew all the results and addressed any issues directly with the partner in charge. Information was shared with engagement teams, though, so each question could be discussed to determine where improvements could be made.
NPS Advice and Ideas
Salo, Ritchie and Gregg offered a few ideas for those interested in utilizing NPS in their firms:
- Don’t overthink it – Don’t spend six months coming up with the best possible questions, Gregg says. It doesn’t have to be perfect right out of the gate. Start by asking clients if they’d recommend your firm and include a couple of open-ended questions.
- Define your intended purpose – If your aim is to get authentic feedback, don’t pick your favorite clients, Salo says.
- Think beyond client service – NPS can be used for employees too. Known as eNPS, it’s a way to measure how your employees feel about working at the firm. Another idea is to recognize professionals who are singled out by clients as great service providers, perhaps with an award that appears in Zoom backgrounds, Gregg suggests.
The very fact that firms like Cray Kaiser and Kernutt Stokes collect NPS data shows a commitment to client service and satisfaction. “This isn’t a stick,” Ritchie says. “It’s an opportunity for us to get better.”
This article originally appeared in the October 2022 edition of INSIDE Public Accounting. To subscribe to INSIDE Public Accounting Monthly click here.
